What Future for the Green Bond Market? How Can Policymakers, Companies, and Investors Unlock the Potential of the Green Bond Market?

Deschryver, Pauline; Mariz, Frédéric Rozeira de

doi:10.3390/jrfm13030061

Cited by 124 publications

(101 citation statements)

References 17 publications

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“…The urgent need to finance climate and environmental solutions makes green bonds attractive. In order to further develop the green bond market, Deschryver and Mariz (2020) proposed measures to unlock the potential of green bonds to finance the sustainability goals. Those measures include standardization of the green bond market, high standards of disclosure and reporting, development of synergies with other sectors and instruments, and facilitation of investment in emerging economies.…”

Section: Discussionmentioning

confidence: 99%

“…In the green bond area, Ehlers and Packer (2017) addressed issues related to green bond certification and the environmentally related financial risks of green bonds. Deschryver and Mariz (2020) proposed measures to overcome the challenges in the continued growth of the green bond market. Cochu et al (2016) also identified bottlenecks and proposed policy measures to facilitate green bond issuance.…”

Section: Select Literature On Green Bondsmentioning

confidence: 99%

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Survey of Green Bond Pricing and Investment Performance

Liaw¹

2020

JRFM

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Green bonds are similar to conventional bonds but are specifically earmarked to raise money to finance climate or environmental projects. There have been anecdotes of green bonds being priced tighter than similar conventional bonds by the same issuers. Our survey of academic literature indicates that most papers show the yield of a green bond is lower than that of the equivalent conventional bond at issuance (also known as green premium or greenium). However, green bond pricing studies by Climate Bonds Initiative produce mixed results. The conflicting results are likely explained by differences in sample selections, time periods, methodologies, and the properties of the respective issuing entity and the bond. In addition, we examine investment returns from select green bond funds and green bond indexes. The assets under management of those funds are still small and they underperform their benchmark indexes.

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Section: Discussionmentioning

confidence: 99%

Section: Select Literature On Green Bondsmentioning

confidence: 99%

Survey of Green Bond Pricing and Investment Performance

Liaw¹

2020

JRFM

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“…In order to analyze the impact of green bonds on the profitability and financial structure of the project, we assume that, in the course of the investment, the sponsor redeems the old debt and issues green bonds by the same nominal amount. Although there are different categories of green bonds, most of them are non-recourse debt precisely because a SPV is formed to limit liability [12] (p. 269), [38,39]. Building on the fact that a non-recourse debt obligation restricts the lenders' ability to seek repayment if there is a default, [11] (p. 16) states that when the management's control benefits differ significantly between one project to another, but the relative capabilities to manage the projects are similar, limited resource financing will be optimal.…”

Section: Methodsmentioning

confidence: 99%

On the Effect of Green Bonds on the Profitability and Credit Quality of Project Financing

Alonso‐Conde

Rojo-Suárez

2020

Sustainability

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The relatively recent green bond market is increasingly attracting interest at the technical, regulatory, and academic research levels. Although a considerable body of research on green bonds focuses on the investor’s perspective, this study takes the perspective of a project finance sponsor to analyze whether there is a direct financial incentive for issuing green bonds in contrast to other types of financing. In order to measure the impact of green bond financing on the profitability and solvency of environmentally friendly investments, we study the sensitivity of the financial performance of a well-established project finance investment—the Sagunto regasification plant—to shifts in its financial structure. In particular, we develop a base case that allows us to study the impact of green financing compared to other financial structures typically used in project finance, under different scenarios. Our results show that in all cases, the internal rate of return (IRR) for shareholders is higher when green bonds instead of bank loans are issued to finance investments. Additionally, in the vast majority of the scenarios, green bond financing results in higher average debt service coverage ratios. Consequently, our results suggest that green bond financing constitutes a strong financial incentive for sponsors, which can help align their objectives with those of public authorities.

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“…In practice, the European Investment Bank was the pioneer in issuing bonds with climate objectives, having issued in 2007 an amount of EUR 600 million, for the purpose of financing projects related to energy efficiency and the use of renewable energy. The following year, the World Bank, through the International Bank for Reconstruction and Development (IBRD), issued its first green bonds in the amount of approximately US$ 400 million (World Bank, 2015;Deschryver and Mariz, 2020;Flammer, 2020).…”

Section: Overview and Assignments Of The Green Bond Market In The Transition To A Low Carbon Economymentioning

confidence: 99%

“…Along with the GBP, another international standard for bond certification is the Climate Bond Standard (from the Climate Bonds Initiative). The certification is characterized as a process in which the bond receives the green label, which indicates that its revenues will be used to finance projects aligned with environmental or climate issues, which gives investors greater confidence, reducing the risk of greenwashing 6 (Deschryver and Mariz, 2020;Fender, et. al., 2019).…”

Section: Overview and Assignments Of The Green Bond Market In The Transition To A Low Carbon Economymentioning

confidence: 99%

Green Transition in Emerging Countries: The Issuance of Green Bonds by Brazil and China

Deus¹,

Crocco²,

Silva³

2021

Blucher Engineering Proceedings

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Green bonds had emerged as a financial innovation, mobilizing incremental resources for long-term financing of projects focused on building sustainable infrastructure. Since COP-21, new ways of producing and consuming, that mitigate environmental and climate change, have been emphasized and several countries committed themselves to increase their participation in the green bond market. The aim of this article is to identify the main characteristics and differences of the green bond market in Brazil and China, especially in terms of the sectors and the allocation of income. For this, information on the amount issued in certified green bonds, in the Climate Bonds Initiative database, was used. In terms of the total amount issued in certified green bonds and the allocation of resources by sector, China shows more significant results. This shows that the financial characteristics of this country associated with planning and wellcoordinated national policies have contributed to Chinese having better results.

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What Future for the Green Bond Market? How Can Policymakers, Companies, and Investors Unlock the Potential of the Green Bond Market?

Cited by 124 publications

References 17 publications

Survey of Green Bond Pricing and Investment Performance

Survey of Green Bond Pricing and Investment Performance

On the Effect of Green Bonds on the Profitability and Credit Quality of Project Financing

Green Transition in Emerging Countries: The Issuance of Green Bonds by Brazil and China

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